INFORMATION ON PFR2 SUB-PROJECTS: Appendix 1: Da Nang Appendix 2: Hue Appendix 3: Hai Phong Appendix 4: Buon Ma Thuot Appendix 5: Quang Tri The second tranche of the Multitranche Financing Facility (MFF) Viet Nam Water Sector Investment Program would finance five water companies. Three are prepared with grant funding from the Water Financing Partnership Facility, managed by ADB for Danang, Hue and Hai Phong; one under proposed World Bank financing and reallocated to ADB for Buon Ma Thuot and one from the French bilateral cooperation for Quang Tri. The water companies are finishing their Feasibility Study, currently at pre-feasibility study level; draft information is included for each water company in Appendix. ADB Project Team would appraise the sub-projects during the first semester of 2011, before proposing for considering financing under PFR2. All projects are categorized Category B for Environment, A for Resettlement and C for Indigenous People, expect Hue sub-project, categorized A, with a Ethnic Minority Development Plan prepared following the safeguard framework of the MFF. The second Tranche would be classified Enhanced Gender Mainstreaming. ADB Project Team, January 2011 APPENDIX 1: PFR2 Sub-Project Da Nang EXTRACT FROM FEASIBILITY STUDY DANANG WATER SUPPLY PROJECT Prepared under Asian Development Bank (VIE-TA7144) PROJECT SUMMARY Sector Background 1. In recent years Da Nang city, like most of Vietnam, has achieved impressive economic growth and substantially reduced poverty levels. While this growth has generally led to increased living standards it has been accompanied by a high rate of migration from rural to urban areas and rapid urbanization with Da Nang city experiencing an urban growth rate of 2.6% per annum over the last decade. As a result the city has expanded well beyond the areas at present served by the Da Nang Water Supply Company (DAWACO) distribution network and treated water production capacity will soon be outstripped by the rapidly increasing demand from the population, commerce and industry. While commendable steps have been taken to reduce NRW in recent years it still stands at over 30% and absorbs funds which otherwise could be used to expand and improve the network. 2. DAWACO is a Public Service Enterprise operating under the Enterprise Law. Despite recent moves by the GoV to decentralize, the level of autonomy of water supply companies has been limited, particularly in respect of water supply tariffs which are generally set by the provincial PCs at levels which cover O&M costs but are insufficient to fully recover the costs of capital needed by the utility for development. 3. The sector is however now undergoing change in line with GoV’s plans to move towards a more market oriented economy. In July 2007 the Central Government issued Decree 117/2007/ND-CP which requires all water companies to operate as commercial entities with full cost recovery, proposes formal contracts between owners and operators, and clarifies issues of asset ownership. At present GoV favors the establishment of one member limited liability entities as an interim stage along the WSC reformation process and DAWACO will take this step in the near future. 4. The Government’s Orientation Plan for Development of Urban Water Supply to 2020 defines the policy and direction for the water sector, and stresses the importance of institutional reform as a key element in the development of a strong, efficient and sustainable water and sanitation sector. GOV Decision No 1929/QĐ-TTg on Approval of Water Supply Development Orientation for Urban and Industrial Areas in Vietnam to the year 2025 and vision to the year 2050 - sets out specific water supply development targets and objectives to the Year 2015, 2020 and 2025 including coverage levels, minimum per capita consumption levels and NRW targets. Project Description 5. In March 2007 during the water financing conferences held in Hanoi, the Government of Vietnam requested the ADB for assistance to prepare the Da Nang Water Supply Project (DNWSP). The Project is proposed for funding under the Water Financing Partnership Facility managed by ADB and will provide a sustainable water supply for the city of Da Nang in the short and medium term and is also expected to develop infrastructure and promote Public Private Partnerships (PPPs) in line with ADB’s country strategy and program for Vietnam. It will also contribute to Target 10 of the Millenium Development Goals (MDGs) which calls for signatory countries to halve the population without sustainable access to safe drinking water and sanitation by year 2015. 6. Project Objectives: The overall objective of the Da Nang Water Supply Project is to improve the living conditions and health of the population in urban and peri-urban areas by expanding and improving the clean water production capacity and the distribution network coverage within the city. 7. Project Outcomes: The Project is expected to contribute to sustainable economic growth and improve the urban quality of life in Da Nang city through provision of accessible, equitable, and sustained water supply services. The expected outcomes are (i) improved and expanded access to safe and sustainable water supply services; (ii) increased public awareness of the importance of using safe water and reduced risk to public health; and (iii) improved management capacity of DAWACO and sustained service provision through adequate tariffs and cost recovery, and strengthened sector regulation. 8. Project Components: The Project will consist of five components designed to achieve the above objectives: i. Increased production capacity through: - Construction of a new 16 km raw water main from a new dam to be constructed on the Cu De river to a new water treatment plant in the North-west of the city. - Construction of the new 120.000 m3/day capacity new water treatment plant at Hoa Lien commune in Hoa Vang district. ii. Expansion of the network to serve all areas of the city and replacement of leaking pipes to reduce NRW. iii. New ICT equipment including further upgrades to the recently installed ERM system, GIS, hydraulic modeling and additional SCADA equipment will be provided. iv. Strengthening of DAWACO’s management capacity and capability for operation and maintenance of the system v. Climate Change interventions including the following four sub components: - Water Conservation - Disaster Management - Energy Improvement - Improvement of Drinking Water quality to WHO Standards 9. Institutional support program(ISP): This four year program (Component 4) consists of a 10-point institutional strengthening plan to be implemented from 2011 to 2015 and designed to help DAWACO operate and manage it’s facilities more efficiently and reduce NRW from its current level of about 32% of production to 25% by the end of 2015. The support activities will include, but not be limited to, the improvement of DAWACO’s GIS, SCADA and hydraulic modeling capability, further leakage reduction, improved water metering, and optimized asset management decisions. A similar program will be implemented during 2016-2025, to further reduce NRW to the national target level of 15%. In addition, DAWACO is expected to continue its in-house ISP. The ISP inputs will be provided through an operational management contract with an international company with a strong track record as a water utility operator. Agencies Responsible for the Project. 10. In accordance with the Government’s decentralization policy, DAWACO will be the Executing Agency (EA) responsible for the implementation of the Project. The DNPC will allocate the counterpart funding, provide policy guidance, and monitor and evaluate project activities and after the loan effectiveness, will set up a PMU under DAWACO as the implementing agency. 11. A project steering committee (PSC) will be established in DNPC. It’ main functions will be to advise PMU and to resolve matters that require interdepartmental coordination at the provincial level. The PSC will be chaired by a DNPC vice chair, and members will represent stakeholders, including, but not necessarily limited to, the provincial departments of finance, planning and investment, health, environment and natural resources, and construction and/or public works as well as mass organisations such as Womens Union. Time Schedule for Project Implementation 12. It is estimated that the present Project covering the first stage of investment to be financed under a Multi-tranch Financing Facility (MFF) will be implemented over 5 years, commencing in mid 2011. To minimize delays, the PMU needs to be established and project consultants recruited by the start of the third quarter of 2011. Detailed design is scheduled for completion by early 2012, and construction is expected to commence at the start of 2013 and end three years later in December 2015. Land acquisition and resettlement will be conducted before construction starts. Consulting services for construction supervision, and institutional development and capacity building will be provided until the end of Year 5 (2015). Location for Project Implementation 13. All of the Project activities will be undertaken within the boundaries of Da Nang city. The location of each of the main Project Components is shown on the location map (Figure 1.1) and is described below: i. New Raw Water Pipeline. The new raw water pipeline will extend a total distance of 16 km. along the Southern side of the Cu De river valley. It will start at the Song Bac dam which will be constructed by hydropower developer, GERUCO Song Con, and end at the new WTP site at Hoa Lien commune in Hoa Vang district. For it’s entire length the pipeline will be located in Hoa Vang district. ii. Hoa Lien Water Treatment Plant. A new 120,000 m3/day capacity water treatment plant will be constructed in Hoa Lien commune, Hoa Vang district. The plant location is at the North Western extremity of the city’s urbanized area at the point where the Cu De river valley broadens out into the coastal plains.